As of May 27, 2025, Change Healthcare Inc's estimated intrinsic value ranges from $5.63 to $13.14 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $12.61 | -54.1% |
| Discounted Cash Flow (5Y) | $7.27 | -73.6% |
| Dividend Discount Model (Multi-Stage) | $5.63 | -79.5% |
| Earnings Power Value | $13.14 | -52.2% |
Is Change Healthcare Inc (CHNG) undervalued or overvalued?
With the current market price at $27.49, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Change Healthcare Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.66 | 0.76 |
| Cost of equity | 6.9% | 9.1% |
| Cost of debt | 4.0% | 23.9% |
| Tax rate | 35.7% | 44.5% |
| Debt/Equity ratio | 0.51 | 0.51 |
| After-tax WACC | 5.4% | 10.5% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $7 | $6,784M | 85.1% |
| 10-Year Growth | $13 | $8,537M | 72.4% |
| 5-Year EBITDA | $19 | $10,551M | 90.4% |
| 10-Year EBITDA | $21 | $11,282M | 79.1% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $624M |
| Discount Rate (WACC) | 10.5% - 5.4% |
| Enterprise Value | $5,934M - $11,487M |
| Net Debt | $4,397M |
| Equity Value | $1,537M - $7,089M |
| Outstanding Shares | 328M |
| Fair Value | $5 - $22 |
| Selected Fair Value | $13.14 |
| Metric | Value |
|---|---|
| Market Capitalization | $9025M |
| Enterprise Value | $13422M |
| Trailing P/E | 0.00 |
| Forward P/E | 0.00 |
| Trailing EV/EBITDA | 17.95 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.51 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $3.78 |
| Discounted Cash Flow (5Y) | 29% | $1.82 |
| Dividend Discount Model (Multi-Stage) | 24% | $1.13 |
| Earnings Power Value | 12% | $1.31 |
| Weighted Average | 100% | $9.46 |
Based on our comprehensive valuation analysis, Change Healthcare Inc's weighted average intrinsic value is $9.46, which is approximately 65.6% below the current market price of $27.49.
Key investment considerations:
Given these factors, we believe Change Healthcare Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.